Beijing [China], August 25 (ANI): China, the world’s largest creditor, shockingly uses a confidentiality clause that prohibits borrowers from revealing the terms of the contract or even the existence of the debt itself.
The International Rights and Security Forum (IFFRAS) says a recent collaborative study by the Peterson Institute for International Economics, the Kiel Institute for International Economics, and the Global Development Assistance Data Center will use these contracts to put the country in debt. I reported that I had concluded.
The study mentioned in this article examined 100 contracts signed between 2000 and 2020 and is state-owned by China in 24 developing countries in Africa, Asia, Eastern Europe, Latin America and Oceania. We systematically analyzed the legal conditions of loans that companies and government borrowers obey. Commitment of US $ 36.6 billion.
China’s credit terms are still heavily biased in favor of Chinese lenders over other creditors. The credits offered include collateral arrangements, including Paris Club provisions and provisions that allow lenders to influence the debtor’s domestic and foreign policy. In general, credit terms are also kept secret from other creditors, including the IMF and other international organizations.
The Paris Club is a group of major creditors with policies to extend coordinated debt relief to developing countries, in addition to ensuring sustainable debt levels.
Apart from this, the Chinese also emphasize that they keep their credit terms secret from the citizens of both the borrowing and lending countries, who otherwise have a legitimate right to know.
Lenders are also free to cancel the loan earlier than planned or have the discretion to request full repayment. Such conditions could clearly allow the lender (in this case the Chinese) to exert influence over the borrower, limiting the borrower’s policy space and canceling unfavorable loans, or affecting the terms of the Chinese agreement. It makes it possible to issue new environmental regulations that have sex.
According to IFFRAS, all Chinese creditors, including commercial banks, hedge funds, suppliers and export credit agencies, seek influence over borrowing countries to increase their prospects for repayment by legal, economic and political means. I am.
China has devised a unique way to preferentially secure repayments by combining standard commercial and official lending conditions, in the process gaining a stronger understanding of the borrower’s economic and foreign policy.
As such, the three main insights that emerge from the analysis of China’s lending patterns are: a) China’s contract contains an unusual confidentiality clause that prevents borrowers from disclosing details, especially since 2015. b) Second, Chinese lenders want to have an advantage over other creditors, including collateral arrangements such as managing revenue accounts. c) Third, the cancellation, acceleration and stabilization clauses in China’s loan agreements are much more common, allowing lenders to influence the debtor’s domestic and foreign policy.
In other words, China’s lending terms, even if unenforceable in court, can limit the borrower’s crisis management options and complicate debt renegotiations at any given time. This analysis of China’s lending patterns represents a well-thought-out strategy for managing credit risk and overcoming enforcement hurdles that can occur in any borrowing country, IFFRAS reported.
In fact, the impact of China’s predatory financing is as great as Sri Lanka, which has already witnessed the loss of strategic resources as collateral for loans, as in the case of Hambantota Harbor, where more than 1,500 acres of land were handed over around the port. It’s not obvious. Traveled to China with a 1999 lease.
A similar situation cannot be ruled out in Pakistan. Despite international warnings about the imminent, Malaysia followed the same path and was involved in the debt cycle.
Like Sri Lanka, Pakistan is upset under heavy debt pressure on Chinese people for the China-Pakistan Economic Corridor (CPEC) project, which is worth nearly US $ 60 billion. The Pakistani economy has been working to increase debt over the past few years, with a nearly bankrupt government and a severe balance of payments crisis.
Recently, IFFRAS reported that the main obstacle to CPEC is that Pakistan cannot accept more China’s debt due to rising electricity prices and construction costs.
Therefore, China’s predatory debt policy in the Indian subcontinent such as Sri Lanka and Pakistan, or in the Indo-Pacific countries such as Thailand, Laos, Cambodia and Africa is a testimony to issues such as Sudan and Ethiopia, to name a few. .. IFFRAS reported the fact that the borrowing country is on the verge of losing sovereignty but wants to be independent.
Cases of opposition to BRI have increased significantly in some of the more than 150 countries on China’s credit list. (ANI)
“China puts countries with confidentiality clauses in debt”
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